Fine stems from lawsuit alleging Google sent search queries to third parties without users' knowledge/consent to improve ad revenue

Five U.S. privacy groups have opposed a proposed $8.5 million settlement with Google in a class-action lawsuit over search privacy, as it fails to require Google to change its business practices, they said.

Google was sued in October 2010 in the U.S. District Court for the Northern District of California. The Internet giant allegedly transmitted user search queries to third parties without their knowledge or consent in order to enhance advertising revenue and profitability. Google shares search queries "via referrer headers," according to a court document.

The headers identify the address of a Web page that linked to the current page. When a Google user clicks on a link from Google's search results page, the owner of the website that the user clicks on will receive from Google the user's search terms in the referrer header because the search terms are included in the URL.

The search terms can contain users' real names, street addresses, phone numbers, credit card numbers, and Social Security numbers, all of which increases the risk of identity theft, according to the original complaint. Those queries can also contain highly personal and sensitive issues, such as confidential medical information, racial or ethnic origins, political or religious beliefs, or sexuality, according to the complaint.

On Monday, the plaintiffs in the class-action lawsuit filed a motion for settlement. Google has agreed to pay $8.5 million in cash into a settlement fund, according to the motion.

The proposed agreement provides for a single settlement class, in this case all persons in the United States who submitted a search query to Google at any time from Oct. 25, 2006 until the date of the notice of the proposed class-action settlement, according to the document.

The money however will not be divided among all Google users in the United States, but rather be paid to organizations that can protect the interests of individuals.

Part of the settlement fee is meant to cover settlement administration expenses and part will be paid to the World Privacy Forum, Carnegie-Mellon, Berkman Center for Internet and Society at Harvard University, and Stanford Center for Internet and Society among others, according to the document.

The recipients must agree to devote the funds to promote public awareness and education, and/or to support research, development, and initiatives, related to protecting privacy on the Internet, according to the proposed settlement.

Besides a monetary settlement, Google also agreed to notify users as to its conduct so that users can make informed choices about whether and how to use Google search.

But the settlement proposal is not good enough, according to privacy organisations including the Electronic Privacy Information Center, Consumer Watchdog, Patient Privacy Rights, the Center for Digital Democracy, and the Privacy Rights Clearinghouse.

In a joint letter sent to Judge Edward J. Davila on Thursday, they urge him not to accept the proposed settlement.

The main problem with the proposal is that it fails to require Google to change its business practices, they said.

"The only change brought about by the proposed settlement is a modification of Google's privacy policy to allow the company to continue the disputed practice," they wrote, adding that privacy notices are widely ineffective because users don't read them. If users read them, it requires considerable sophistication as well as a considerable amount of time. Also, reading a notice typically produces no practical benefit because the terms are pre-determined by the companies and may be changed at any time, the groups added.

"Thus, additional notice will provide no meaningful benefit to the class. To the contrary, the revised notice will essentially ratify the company's continuation of the practice that gave rise to this suit," they said.

The proposed settlement also fails to provide any monetary relief to the class, they wrote. Of the organizations that will benefit from the settlement, with the exception of the World Privacy Forum, none have the protection of privacy as a mission, they added.

"The absence of a benefit to the class combined with the proposed allocation of awards to institutions not aligned with the interests of class members is not accidental," the privacy groups wrote.

"Proposed class counsel, seeking to settle the matter and obtain their fees, have prioritized their own personal financial interests above the interests of the Class. It may serve their interests to have the preliminary settlement approved; it serves the putative Class members not all. For these reasons, the preliminary settlement agreement should be rejected," they added.